Mumbai, March 16 (IANS): In a bid to ease the US dollar requirements of open market, the Reserve Bank of India on Monday decided to conduct a six-month swaps worth $2 billion to provide liquidity to the foreign exchange market.

Accordingly, the Reserve Bank's Governor Shaktikanta Das in Mumbai on Monday said that the swaps will be conducted through the auction route in multiple tranches.

In financial parlance, the swap action by the Reserve Bank will ease the US dollar requirements of the foreign exchange market at multiple price rates to stem the high volatility in INR-US exchange rates.

As per plan, the auctions will be multiple price based with successful bids being accepted at respective quoted premiums.

According to the Reserve Bank, financial markets worldwide are facing intense selling pressures on extreme risk aversion due to the spread of COVID-19 infections, compounded by the slump in international crude prices and a decline in bond yields in advanced economies.

"Flight to safety has led to spike in volatility across all asset classes, with several emerging market currencies experiencing downside pressures," the RBI said in a statement.

"Mismatches in US dollar liquidity have become accentuated across the world," if further said.

In addition, the Reserve Bank said that it is closely and continuously monitoring the rapidly evolving global situation and spill overs.

The RBI statement said, "It stands ready to take all necessary measures to ensure that the effects of the COVID-19 pandemic on the Indian economy are mitigated, and financial markets and institutions in India continue to function normally."

"The level of forex reserves at $487.24 billion as on March 6, 2020 remains comfortable to meet any exigency," it added.